Are We Heading Towards a Buyer's Market?

By Rebecca Durfey

Rebecca Durfey brings over 20 years of experience in real estate transactions within Maricopa County. Despite managing multiple clients simultaneously, her primary focus is to provide a personalized experience that makes you feel like her sole priority. Rebecca and her team are dedicated to efficiently achieving the desired outcomes for each client they serve.

The Phoenix-metro (Maricopa county) housing market has been sluggish in terms of closed contracts for nearly two years. Between the increase of inventory month over month and demand not keeping up with the added inventory, we continue to stay in that stagnant sideways market. In general, homes have taken longer to sell and the prices have not increased year-over-year like we are used to in Arizona. A number of potential home buyers are trying to figure out when the perfect time to buy a home will be, thinking maybe home prices and interest rates will both go down in the coming months. I don’t want to try and predict the long-term market when there are so many variables. However, my best answer is that I don’t anticipate our housing prices will fall at the same time as interest rates also come down. In fact, I expect that we would stay in a somewhat balanced market while inventory is high, but as soon as that inventory gets snatched up, the prices would most likely increase. The laws of supply and demand are basic economics and have proven out time and time again.

Here are three things that could be helpful information about our housing market, whether you’re buying or selling:

1. Why is our market in a balanced state? Despite record-high home prices, the prices aren’t falling in most areas because the demand for housing and the supply of available homes is fairly even. Arizona is more often in a seller’s market than a balanced state, so the longer days on market due to higher inventory could cause many sellers concern and could also lead buyers to think sellers are going to be anxious to sell for lower prices. However, most sellers are not desperate and most buyers have more choices at a particular price-point, but are not seeing prices drop. Simply put: inventory has not increased enough to offset the similar level of demand.

2. Condition matters. In the current market, there is a large gap between homes in good condition and those that need work. Due to affordability, buyers don’t have the extra cash to make repairs after closing. Even if they did, they don’t want to spend it on fix-ups. If the homes are not showing at their best, they won’t likely get offers – or the offers could be lower based on home condition. The lack of demand and the higher inventory means (as my favorite housing analyst at Cromford Report always says) your home needs to be “the prettiest girl at the dance” so a buyer will pick it. There are more options than we are used to and we want your home to show in the best light. If you are showing well, priced right (and this is a tough one because not all homes have great comparable properties right now), and readily available to see, there should be interest in your home. Some homes are getting multiple offers – even in this difficult market. In many cases, you don’t have to spend a lot of money on cosmetic updates if the home is spotless, priced well, cared for, and available to see at any time.

3. The market may speed up again soon. We have been in this balanced market for about two years. There are buyers on the sideline that are anxious to purchase a home and there are sellers who have been waiting for the right time to sell their home so they can upgrade to a home that meets their current needs. We have good data to show that a shift into a stronger seller market could be on the horizon. We love employment, but unemployment does help housing markets because rates tend to go down and, as we know unemployment is increasing. Most experts do believe the Federal Reserve will continue to lower interest rates over the coming months. If that does happen, then buying a home would be more affordable and that would spur new buyer demand. If that fresh wave of demand comes to the market, inventory will reduce, and prices could then increase.

No one can absolutely guess what will happen in our housing market, but I have been in this industry for over 20 years and I have seen many markets. I believe the data that shows Arizona has already been in our housing “recession” for two years – and I don’t anticipate that it will last much longer. We have strong economic and employment indicators, continued infrastructure growth, and our migration of people coming to the state is high. This tells me that NOW could be your best time to buy a home, whether first time home buyer, second home buyer, or “move up” buyer. Negotiations on a buyer’s side may be the best it will be for some time.

If you are thinking of listing your home or buying a home and want to discuss strategies and how to navigate this unique market, please reach out. I will always be here.